According to a new report from Pike Research, the combined market for Lithium-ion batteries will soar over the next several years, increasing from $2.0 billion worldwide in 2011 to more than $14.6 billion by 2017.

With Electric Vehicles (EVs) relying almost exclusively on such batteries, Pike has forecasted that capacity shipments of Li-ion batteries for the transportation market will increase from 2.5m kilowatt hours (kWh) to nearly 28.0 million kWh during the same period.

John Gartner, research director at Pike, said: ‘The government subsidies that gave the initial impetus to the electric vehicle market will continue to drive the market in the near term. However, significant reductions in battery cost are imperative for the industry to grow to its target levels. While the cost of lithium ion batteries is gradually declining, cost still represents a significant hurdle as it accounts for a large portion of total EV cost.’

Gartner adds that there are currently more than half a dozen battery chemistries with unique properties for power, energy density, and life cycle performance that are being commercialized. While Pike Research believes that there is no single chemistry that will emerge as the clear winner, owing to the tradeoffs in their various properties, initial indications point to a greater interest in the lithium iron phosphate chemistry in the years to come due to its superior performance characteristics coupled with increased safety.

Pike Research's analysis indicates that nearly half the demand for Li-ion transportation batteries is likely to come from Asia, led primarily by China, while Europe and the United States are likely to constitute 25% and 21% shares of the world market, respectively.